What Franchisors Have to be Aware of When Selling Franchises in Texas

Considering the dynamic economy and business climate in the State of Texas‚ there are many start-up and established franchisors who are either "franchising their Texas business" or "selling franchises in the State of Texas".  So‚ when considering your obligations as a franchisor in the State of Texas what are some facts that you need to know?

Well‚ here are a few:

1. First‚ Texas is Not a Franchise Registration State.  This means that unlike registration states like New York and California‚ you do not need to register and file your FDD with a Texas regulator.  However‚ don't be confused‚ you still need to prepare‚ maintain‚ update and disclose your FDD prior to the offer or sale of any franchise in the State of Texas.  That is‚ in many ways‚ you are self-regulating yourself and verifying that you have complied with the Federal franchise Rule. 
2. Beware of Business Opportunity Laws.   Like many states‚ Texas does regulate the sale of "business opportunities" and requires certain disclosures regarding business opportunities.  Under Texas law a franchise relationship can qualify as a "business opportunity" . However‚ if you satisfy your federal FDD disclosure obligations you may be entitled to an exemption from Texas' business opportunity requirements.  To obtain this exemption‚ you must file a "business opportunity" notice with the Texas Secretary of State.

Below is a video about Texas franchise law and what you need to do before you offer or sell a franchise in the State of Texas.

Contact us for assistance in registering your FDD in Texas by calling (800) 976-4904.

By Charles Internicola May 7, 2013